Estate of Greatsinger, Matter of

• Decision Date: 01 April 1986
• Citation: 501 N.Y.S.2d 623,67 N.Y.2d 177,492 N.E.2d 751
• Parties: , 492 N.E.2d 751 In the Matter of the ESTATE Of Jacob L. GREATSINGER, Deceased. Walter G. Farrell et al., Respondents. John J. Jennings et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 623

501 N.Y.S.2d 623

67 N.Y.2d 177, 492 N.E.2d 751

In the Matter of the ESTATE Of Jacob L. GREATSINGER, Deceased Walter G. Farrell et al., Respondents John J. Jennings et al., Appellants.

Court of Appeals of New York.

Decided April 1, 1986.

John J. Jennings and Donald H. Tuttle, pro se.

Joseph C. Buck, Elmira, for respondents.

OPINION OF THE COURT

MEYER, Judge.

It was an abuse of discretion as a matter of law for the Appellate Division to direct that the fees of counsel for the unsuccessful contestants in a will construction proceeding for the remainder of a trust of 10% of the residuary estate be paid out of the trust because it was the only one of several trusts created by the testator which was the subject of the proceeding. Other factors that should have been considered by the Appellate Division in making its determination but were ignored were that the proceeding had been brought by the trustee, not by the unsuccessful contestants, that the latter had received distribution of 50% of the residuary estate and that the fees awarded together with the fees allowed the trustee's attorney and the fees payable by the successful contestants would reduce the remainder of the 10% trust by more than 20%. The order of the Appellate Division affirming the Surrogate's order fixing counsel fees pursuant to the direction of the Appellate Division should, therefore, be reversed, with costs, and the application of the unsuccessful contestants for an award of counsel fees out of the estate should be denied.

I

The will of Jacob Greatsinger divided his residuary estate into six separate trusts. Of one, consisting of 50% of the residuary estate, Edna G. Farrell was the life tenant. The remaining 50% was divided into five trusts of 10% each, of one of which Elsie A. Hammond was life tenant. Because Elsie Hammond outlived all of the other life tenants (she was 97 when she died), the only part of the residuary estate remaining in the hands of the trustees was the corpus of Elsie's 10% trust. The Greatsinger will being unclear concerning disposition of the remainder of Elsie's trust, the trustee began a construction proceeding. The issue for determination in that proceeding was whether Chauncey B. Hammond, Elsie's brother, had a vested or a contingent remainder in that trust upon termination of her life estate. If vested, the trust corpus, valued at some $53,000, belonged to his heirs (hereafter "Chauncey's heirs" for short); if contingent, they would receive but 10% of the corpus, the remaining 90% going to the remaindermen of the other residuary trusts, with the remaindermen of Edna Farrell's 50% trust (hereafter "Edna's remaindermen") receiving 50% of the corpus.

The Surrogate held that Elsie's trust passed to Chauncey's heirs but, as authorized by SCPA 2301(5), reserved for future consideration, pending the outcome of any appeal, the question of counsel fees. Edna's remaindermen appealed on the merits; Chauncey's heirs cross-appealed as to counsel fees. The Appellate Division affirmed on the merits, but on the cross appeal directed an award of fees to the remaindermen, citing SCPA 2302(6), because "the instant proceeding has served to resolve a justifiable doubt as to the testator's intent caused by the language used in the will" (95 A.D.2d 123, 128, 466 N.Y.S.2d 812). On remand to the Surrogate, he allowed counsel fees of $5,000, plus disbursements, to the attorneys for the trustee and of $4,900, plus disbursements, to the attorneys for Edna's remaindermen. On further appeal by Chauncey's heirs to the Appellate Division, they did not contest the fee to the trustee's attorneys, but argued that Edna's remaindermen, having been unsuccessful, were not entitled to allowance of attorney's fees. The Appellate Division noted its prior holding "that the proceeding * * * had resolved a justifiable doubt as to the testator's intent and that counsel fees were appropriate", and that the present appeal involved the amount and manner of payment of such fees (107 A.D.2d 873, 484 N.Y.S.2d 311). It held that the Surrogate had not abused his discretion in fixing the amount, and as to the manner of payment ruled "that since only one trust of several created by the will was the subject of these proceedings, the Elsie Hammond Trust, it is entirely appropriate that all fees and disbursements be paid from this source alone" (id., at p. 874, 484 N.Y.S.2d 311).

Chauncey's heirs then appealed under CPLR 5601(d) from the Appellate Division order affirming the fixing of fees, seeking review of that order and the prior nonfinal order of the Appellate Division directing the allowance of counsel fees. We affirmed the prior nonfinal order, holding that it was not an abuse of discretion as a matter of law for the Appellate Division to direct the allowance of counsel fees, without further specification. (66 N.Y.2d 680, 496 N.Y.S.2d 423, 487 N.E.2d 280.) The appeal from the second Appellate Division determination was, however, dismissed insofar as review of that order was sought without prejudice to a motion for leave to appeal, because that order was not properly before the court for review (CPLR 5501[b] ). Thereafter the court granted appellants' motion for leave to appeal from that order (Matter of Greatsinger, 67 N.Y.2d 602, 490 N.E.2d 556). The only issue presented by this appeal, therefore, is whether it was an abuse of discretion as a matter of law to award any counsel fees to Edna's remaindermen. ¹ We conclude that it was.

II

Although SCPA 2301(2) states that, "Any award for costs or an allowance is in all instances discretionary with the court", and SCPA 2302(6) authorizes the court in a construction proceeding to "award to a fiduciary or any party to the proceeding * * * counsel fees" (emphasis supplied), those provisions must be read together with SCPA 2301(4), which provides that, "Except where special provision is otherwise made by law costs or an allowance may be made payable by any party personally or out of the assets of the estate or out of the share or interest of any person or from both in such proportion as directed by the court and justice requires " (emphasis supplied). The phrase "as justice requires" means "that there are no 'as matter of law' requirements one way or the other as to those matters which are to be dealt with in the discretion of the courts, on all the facts" (Vanderbilt v. Vanderbilt, 1 N.Y.2d 342, 353, 153 N.Y.S.2d 1, 135 N.E.2d 553). It grants the court a broad discretion, but not one unrelated to the facts (Johnson v. Johnson, 295 N.Y. 477, 481, 68 N.E.2d 499). What it grants is a judicial discretion, which though it "is a phrase of great latitude * * * never means the arbitrary will of the judge" (Tripp v. Cook, 26 Wend. 143, 152; accord, People v. Diaz, 10 A.D.2d 80, 90, 198 N.Y.S.2d 27; McGurty v. Delaware, Lackawanna & W.R.R. Co., 172 App.Div. 46, 47, 158 N.Y.S. 285). Rather, it vests in the court "a discretion which is not to be exercised arbitrarily, and which is subject to review in the Court of Appeals, but only as to whether or not it has been abused and not on its merits" (Cohen and Karger, Powers of the New York Court of Appeals § 149, at 593 [rev. ed]; see also, 595; and § 155, at 607). The question we must decide, therefore, is whether in exercising its discretion to allow any fee at all to Edna's remaindermen, the Appellate Division failed to take into account all of the various factors entitled to consideration (see H & J Blits v. Blits, 65 N.Y.2d 1014, 494 N.Y.S.2d 99, 484 N.E.2d 128; Belachew v. Michael, 59 N.Y.2d 1004, 1006, 466 N.Y.S.2d 954, 453 N.E.2d 1243).

The factors to be considered in making an award of counsel fees in a will construction proceeding are spelled out by the case law. Prior to the amendment in 1928 ² of Surrogate's Ct. Act § 278, the predecessor of SCPA 2302(6), there was no authority to award fees to a party to a construction proceeding other than an executor or trustee, except in cases in which the estate had been enhanced by a surcharge against the executor or trustee, the theory being that the attorneys for individual beneficiaries acted to protect the individual interests of the beneficiaries (Matter of Holden, 126 N.Y. 589, 27 N.E. 1063; Savage v. Sherman, 87 N.Y. 277; Matter of Winburn, 160 Misc. 49, 289 N.Y.S. 717). Cases decided since that amendment have held an allowance unjustified when the petitioner was not successful and the services rendered were not beneficial to the estate (Matter of Mahlstedt, 234 App.Div. 891, 254 N.Y.S. 1011), and when the services were rendered in a proceeding initiated by the trustee, which was represented by its own attorney, and were not required for the protection of any common interest of the party represented by the petitioning attorneys and the trustee (Matter of Wadsworth, 275 N.Y. 590, 11 N.E.2d 769, affg. 250 App.Div. 11, 14, 293 N.Y.S. 304). Of interest also, although distinguishable, ³ is Dodd v. Anderson, 197 N.Y. 466, 472, 90 N.E. 1158, which characterized as harsh and unjust a rule which "would cast the financial burden of a contest upon those who win it * * * only to realize that [the estate] had been heavily charged or entirely absorbed [by the fees awarded]."

Doubt as to the testator's intent is a proper basis for the bringing of a construction proceeding and for the allowance of counsel fees to the successful petitioner's attorneys payable from the general estate rather than by petitioner personally (Matter of Liberman, 6 N.Y.2d 525, 190 N.Y.S.2d 672, 160 N.E.2d 912; Matter of Hedrick, 52 A.D.2d 1035, 384 N.Y.S.2d 582), or rather than from the trust share of an unsuccessful annuitant (Matter of Fowler 291 N.Y. 515, 50 N.E.2d 648, affg. 265 App.Div. 617, 40 N.Y.S.2d 872). From this it follows, as held in Matter of James, 264 App.Div. 885, 35 N.Y.S.2d 791), that, "A party instituting a construction proceeding, in good faith, to resolve a justifiable doubt, caused by the language employed in the will,...